The Ultimate Con
Recall the observation in chapter 3 that money is simply an accounting chit created out of nothing, without substance or intrinsic value, which has value only because we believe it does and therefore willingly accept it in exchange for things of real value. In modern financial systems, 139banks create money when they issue a loan. The bank opens an account in the name of the borrower and enters a number representing the amount of the loan in the account. The bank in essence rents to the borrower money it has created from nothing at whatever interest rate the market will bear. It may also acquire a mortgage on the home, farm, or other real property of the borrower. If the borrower cannot make the payments, the bank gets the real property.
This is the relatively straightforward and widely understood part of the modern money con. The more complex part relates to the ability of laxly regulated corporations, banks, and financial markets to facilitate the artificial inflation of the market value of financial assets—including stocks, land, and housing—through accounting fraud, lending pyramids, financial bubbles, and other forms of financial speculation and manipulation.
These financial games contribute nothing of value to the larger society. They do, however, significantly increase the buying power of the ruling elites and their claims on the real wealth of society relative to the claims of those persons who contribute to the creation of that wealth by producing real goods and providing real services. They are the most successful of financial cons because the mechanisms are invisible and the marks—the objects of the con—rarely realize they have been conned. Even if they were to recognize they have been conned, there is nothing they can do about it because the con is both legal and culturally accepted.19
Money from Money
Through the mechanisms of the financial system, the control of real assets inexorably moves over time from those who create real wealth by doing real work to an owning class that lives on the returns on money. In the wake of banking deregulation, nonbanking corporations in the United States have been establishing their own banks to attract government-insured deposits that allow them to lend money to themselves at substantially lower rates than they could get from nonproprietary banks. They recycle the borrowed money into deposits in their own banks to create new reserves from which to make yet more loans to themselves and others.20 It is a kind of a government-guaranteed financial pyramid scheme that generates handsome profits on minimal initial investment, another bit of a smoke-and-mirrors, self-dealing gaming of the money system. 140
The ideal of finance capitalism is to make money solely by collecting monopoly rents or through speculation on financial bubbles and debt pyramids without the inconvenience of producing anything of actual value in the process—an ideal exemplified by Enron until its collapse in disgrace in the hallmark financial scandal of the twenty-first century.
Pervasive Bias
The money system’s bias in favor of the owning class is so pervasive and widely accepted as the natural order as to go largely unnoticed. For example, by the logic of the prevailing money culture, every public and private economic choice is properly vetted on the basis of which of the available options will produce the highest returns on money, which generally works out to mean to people with money.
Another source of bias comes from central bankers, whose publicly acknowledged function is to manage the financial markets of supposedly “free market” economies to maintain a downward pressure on the price of labor. If full employment shows signs of putting upward pressure on wages, the central bankers raise interest rates to slow the economy to reduce inflationary pressures. The unmentioned consequence is to assure that benefits from gains in worker productivity go to profits and the owners of capital rather than to workers.
The gradual transition from monarchy to political democracy during the last half of the second millennium stimulated a corresponding transition from imperial rule by the power of the sword to imperial rule by the power of money. The new rulers donned business suits rather than imperial robes and embraced more subtle tactics as they deftly circumvented the democratic challenge to their power and privilege.
The transition began with the rise of the European nation-states in the aftermath of the Middle Ages. Of a mind to expand their imperial dominion while minimizing the prospect of direct military confrontation with their powerful neighbors, they projected their expansionist ambitions outward to the far reaches of the planet to triumph over weaker states. Rather than turn to loyal generals as their agents of imperial conquest, they issued commissions to swashbuckling adventurers, licensed 141
pirates, and chartered corporations that functioned as officially sanctioned criminal syndicates working for their own account under an imperial franchise. British kings issued corporate charters primarily as a means to create income streams not subject to democratic oversight by the nobles of the early British parliament. Contemporary publicly traded corporations carry forward the mantle of the Crown corporations of an earlier day. The largest now wield more economic and political power than most contemporary nation-states and continue to serve as institutional vehicles by which the propertied class circumvents the institutions of democratic accountability.
The money system, however, is an even more powerful and successful weapon than the corporation in the war of the ruling class against the middle- and lower-income working classes. By controlling the creation and allocation of money, the ruling class maintains near total control over the lives of ordinary people and the resources of the planet.
Empire, in the guise of democracy, remains alive and well. True democracy remains an essential but elusive ideal. As we need to confront the reality of the imperial legacy, so too we must confront the limitations of the democratic experiment. To that end let us now turn to an earlier effort to break free from the play-or-die logic of Empire.
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CHAPTER 8
Athenian Experiment
To save the democracy we thought we had, we must take it to where it’s never been.1
Frances Moore Lappé
Between the time of the Mesopotamian and Egyptian empires and the time of the American Revolution, the era of Empire was punctuated by two celebrated human encounters with egalitarian greatness. The first was Egypt’s golden age (1990-1786 BCE). The second, and better known, was centered in ancient Athens, a Greek city-state known for the graceful beauty of its art and architecture, its belief in the nobility of human achievement, and its devotion to human freedom. Our word democracy comes from the Greek word dēmokratiā: literally, “people power.” The two preceding chapters sought insight into the challenges of the Great Turning from the experience of five thousand years of Empire; this chapter seeks insights from the Athenian experiment in popular democracy and the reflections of its three most fabled philosophers. As the violence and domination of Empire manifest the lower orders of human possibility, so the mutual caring and partnership of the mature democracy of Earth Community manifest the higher orders of human possibility. The realization of the potential of a democratic society goes hand in hand with the realization of the potential of each citizen. Together the practical politics of the Athenian experience and the philosophical reflections of Socrates, Plato, and Aristotle illuminate the importance and implications of this relationship and thereby provide a framework for a deeper understanding of the work of bringing the still limited democracy of our own time to full fruition.
ATHENIAN DEMOCRACY
Perhaps the proximity of Athens to the island of Crete, the center of the Aegean society—believed to be the last, most peaceful, and most equitable 143of the Goddess societies—had something to do with igniting the Greek imagination to the possibilities of an egalitarian form of government. Remnants of the Aegean civilization survived until the eleventh century BCE and retained a presence in the temples of the Greek city-states in which priestesses continued to play a central role. It is also noteworthy that Athens had never been the subject of armed invasion and no military caste ha
d ever imposed its rule.
Athens was ruled as a monarchy until roughly 750 BCE, when the nobles began to wrest power from the king to establish a hereditary aristocracy that lasted until around 600 BCE. Rich mineral deposits and splendid harbors made trade a foundation of economic life and of a vibrant urban culture. The Athenian merchant fleet plied the Mediterranean under the power of sails and galleys of up to two hundred slave rowers, buying cheap in one place and selling dear in another.2 Rural aristocrats who had the resources to sustain them through the five years required to bring grape and olive cultures into profitable production prospered in the rocky Athenian countryside and expanded their land holdings by buying up the lands of failed grain farmers.
Less fortunate farmers who could only afford to plant grains faced the changing fortunes of the harvest and competition from cheap imports from regions better suited to grain production. Forced to borrow against their land at exorbitant interest rates to survive the bad years, they were being driven from their land in large numbers. Sharecroppers who worked land owned by others for a one-sixth share of what they produced survived the bad years by borrowing against their future labor and that of their families. The almost inevitable default on their loans resulted in their sale into slavery. The resulting social tensions created a growing political crisis.
Rise and Fall
Political tensions came to a head in 594 BCE, with threats of revolution in the air. The urban middle class sided with the peasants in a demand for political liberalization and a radical redistribution of wealth. To forestall a potentially violent revolution, all parties agreed to appoint Solon, a respected Athenian statesman, member of the Council of Areopagus, poet, and tradesman, as a magistrate with absolute power to carry out reforms.
Solon canceled outstanding debts, freed all debtors from bondage, made it illegal to enslave debtors, limited the amount of land any 144individual could own, provided loans on favorable terms to small farmers to assist their conversion to grape and olive production, and expanded the political franchise to all but women, residents born to foreign parents, and slaves. No one was wholly satisfied. The aristocracy resented its loss of privileges. The middle and lower classes felt the aristocracy retained too much power.
Athenian political democracy gained little real traction until Cleisthenes, a liberal-minded aristocrat, enlisted the support of the masses to gain the office of chief archon, or highest magistrate (525–524 BCE). He is known as the father of Athenian democracy for granting full rights of citizenship to all free men who resided in the territory of Athens at that time and establishing the Council of Five Hundred as the chief organ of government. The council, whose members were selected by lot from male candidates over thirty years of age submitted by the townships, had supreme authority over executive and administrative functions and the power to prepare and submit legislative proposals to the assembly.
All citizens, thirty thousand adult males at that time, were entitled to participate in the assembly, with six thousand required for a quorum.3 The assembly had the power to debate and pass or reject proposals from the council. It also had the power to declare war, appropriate money, and audit the accounts of retiring magistrates.
The highest point of Athenian democracy was reached during the thirty-year tenure (461–429 BCE) of Pericles as chief strategus, or president, of the Board of Generals, a body comparable to the British cabinet, whose members were chosen by the assembly for one-year terms with unlimited eligibility for reelection. During this period the assembly acquired the authority to initiate legislation without the prior recommendation of the Council of Five Hundred.4
At this point Athenian democracy came as close to the practice of direct democracy—securing the right of every citizen (although a small percentage of the population) to direct participation in the political process—as has been achieved by any state before or since. Yet it fell far short of realizing the democratic ideal of universal suffrage, as the rights of citizenship were denied to women, slaves, and those born to foreign parents.5 Indeed, by some accounts the treatment of women, and even more so of slaves, was as bad as that found in the most brutal of ancient civilizations.6
There were other problems, as illustrated by the trial of Socrates, who was condemned to death by the council for nonconformity. Ultimately, 145Athenian democracy became the victim of its own imperialist ambitions. Reaching out to dominate its neighbors through military force, Athens provoked a war with Sparta in 431 BCE that ended in defeat for Athens in 404 BCE. The war was accompanied by corruption, treason, and growing brutality. Defeat dealt a serious blow to trade and democracy. Culturally, Athens remained strong for a time, and the democrats regained their hold until Athens was defeated by Philip of Macedonia at the battle of Chaeronea in 338 BCE.
Lessons
Perhaps the most sobering, but essential, lesson of the Athenian experiment in democracy is its uniqueness, limited scale, and relatively short tenure. By the most generous definition, Athenian democracy, with all its serious flaws, lasted only 250 years, from the appointment of Solon and the start of the process of democratic reforms in 594 BCE to Athens’s ultimate defeat and subjugation by Philip of Macedonia. At its peak, the population of the peninsula of Attica, which defined the boundaries of Athens as a city-state, was about 315,000 persons. Of those, 43,000 were enfranchised citizens and 155,000 were slaves.7
Consider the stunning implications. With the possible exception of Egypt’s golden age, Western historians take no note of any comparable group of people enjoying equivalent political rights and freedom during the nearly three-thousand-year period between the fall of the early Aegean Goddess civilization and the birth of the United States in 1776. Other examples are found primarily among relatively small tribes of indigenous peoples.
Freedom and democracy are not divine gifts. They are earned and maintained by a vigilant, mindful, and mature citizenry through sustained struggle, and once lost they are not easily regained. Imperial ambition is their almost certain undoing. These are sobering lessons for our own time.
Solon’s choice to respond to the stress of growing economic injustice with internal economic and political reforms that lessened the divide was a distinctive feature of the Athenian experience. It stood in stark contrast to the more common imperial response of leaving a growing economic divide unchecked while seeking to relieve the tension by acquiring new lands for resettlement through the military conquest and enslavement of foreign populations. The conventional response affirms 146the culture and institutions of Empire. Solon’s choice, although only partial, created the necessary economic foundation for Athenian democracy.
Unfortunately, the challenge Athens presented to the classic imperial cultures and institutions of Empire was as temporary as it was partial. Only slaves sold into bondage for payment of their debts gained their freedom under Solon, and slavery remained an important institution. Women never gained political franchise, and Athens on occasion succumbed to the temptations of wars of conquest. In the end the partial nature of the economic reforms and the failure to develop a mature, inclusive democratic culture dedicated to securing the same rights for all people left in place the seeds of the undoing of the Athenian experiment in popular democracy.
A society divided between the enfranchised and the disenfranchised must create a moral justification for denying the humanity and right of participation of the disenfranchised by exaggerating the virtues of the former and the vices of the latter. The racism, sexism, and classism that inevitably follow bar the development of a mature democratic culture that recognizes the natural rights of every person by the fact of their birth. So long as the culture defines some people as inherently less worthy than others, the only question becomes how the division of society between the free and the slave will be decided; the underlying cultural and institutional foundations of Empire remain in place.
The Athenian experience points to the difference between the more mature and less mature democratic forms. The less mature demo
cracy centers on securing the individual rights of members of particular favored categories of persons in relation to the institutions of the state. A more mature democracy seeks to secure the rights, affirm the responsibilities, and support the full human development of all persons through their full and active engagement in civic life to create what three celebrated Athenian philosophers referred to as the “good society.”
POLITICAL PHILOSOPHY
The most celebrated of Athenian philosophers—Socrates, Plato, and Aristotle, the fabled three—were men of exceptional intellectual power and curiosity. Their inquiries into the nature of the good society remind us of the deeper purpose of democratic governance and the barriers that make the attainment of this purpose so challenging. 147
The Good Society
The fabled three believed that truth is real, is discoverable through disciplined intellectual inquiry, and is the proper basis for a good society. Underlying all their work was a belief in the goodness of Creation and in the human capacity to reach beyond competitive power and greed in the quest for a good society.
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